Mizuho Healthcare REIT Conference - April 2021 - Welltower
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Mizuho Healthcare REIT Conference April 2021
Forward Looking Statements
This document contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When Welltower uses words such as “may,” “will,”
“intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “pro forma,” “estimate” or similar expressions that do not relate solely to historical matters, Welltower is making
forward-looking statements. Forward-looking statements, including statements related to Funds From Operations guidance, are not guarantees of future performance and
involve risks and uncertainties that may cause Welltower’s actual results to differ materially from Welltower’s expectations discussed in the forward-looking statements.
This may be a result of various factors, including, but not limited to: the successful completion of the transactions; the duration and scope of the COVID-19 pandemic; the
impact of the COVID-19 pandemic on occupancy rates and on the operations of Welltower and its operators/tenants; actions governments take in response to the COVID-
19 pandemic, including the introduction of public health measures and other regulations affecting Welltower’s properties and the operations of Welltower and its
operators/tenants; the receipt of relief funds under the CARES Act and other future stimulus legislation, the effects of health and safety measures adopted by Welltower
and its operators/tenants related to the COVID-19 pandemic; increased operational costs as a result of health and safety measures related to COVID-19; the impact of the
COVID-19 pandemic on the business and financial condition of operators/tenants and their ability to make payments to Welltower; disruptions to Welltower's property
acquisition and disposition activity due to economic uncertainty caused by COVID-19; general economic uncertainty in key markets as a result of the COVID-19 pandemic
and a worsening of global economic conditions or low levels of economic growth; the status of capital markets, including availability and cost of capital; issues facing the
health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and
operators’/tenants’ difficulty in cost effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health
care and seniors housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to
pay rent and repay loans; Welltower’s ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when
anticipated; natural disasters and other acts of God affecting Welltower’s properties; Welltower’s ability to re-lease space at similar rates as vacancies occur; Welltower’s
ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture
partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against
operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting Welltower’s properties;
changes in rules or practices governing Welltower’s financial reporting; the movement of U.S. and foreign currency exchange rates; Welltower’s ability to maintain
Welltower’s qualification as a REIT; key management personnel recruitment and retention; and other risks described in Welltower’s reports filed from time to time with the
SEC. Finally, Welltower undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or
otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.
2
Recent Developments
First Quarter 2021 Funds from Operations (FFO) Update
(1)
• Welltower (“WELL”) expects to achieve the top end of its normalized FFO guidance range of $0.71 - $0.76 per diluted share
• WELL expects 1Q21 average occupancy for its Seniors Housing Operating (SHO) portfolio to finish favorably to the midpoint of its -275 to -375 bps guidance range
(2)
Seniors Housing Operating (SHO) Portfolio Update
• Following a decline in occupancy in early March, spot occupancy has increased in recent weeks, with an approximate gain of 30 basis points (“bps”) since March 12th
• SHO portfolio occupancy has increased for three consecutive weeks, driven by our US and UK portfolios, with occupancy gains of approximately 65bps and 50bps,
respectively, since March 12th. Following a nationwide rise in COVID-19 cases, occupancy in Canada has declined by 40bps over the same period
• Many communities are returning to pre-COVID conditions with resumption of in-person tours, indoor visitation, communal dining, and social programming
• Lead generation for many communities has returned to pre-COVID levels following a steep decline in COVID cases amongst residents & staff and across our geographies
• Trailing two week resident cases have declined by 99% from mid-January through April 1, 2021; nearly all communities are currently accepting new residents
COVID-19 Vaccine Update
(2)
• Virtually all Assisted Living and Memory Care communities are expected to have completed their final scheduled vaccination clinic by early-to-mid April
Investment and Balance Sheet Update
• During 1Q21, WELL completed $209 million of pro rata acquisitions at an initial yield of 6.2%; pro rata dispositions totaled $216 million at a yield of 5.5%
• WELL’s near-term capital deployment pipeline remains robust across a wide range of opportunities
• In March 2021, successfully closed $750 million offering of 2.800% senior unsecured notes due June 2031
• Proceeds from the offering will be used, in part, to redeem all remaining outstanding unsecured senior notes due in 2023 and for general corporate purposes
• Following the expected April 16, 2021 redemption of all unsecured senior notes due in 2023, WELL will have no unsecured senior note maturities until 2024
• As of March 31, 2021, near-term liquidity stands at $4.8 billion; inclusive of expected future proceeds from announced dispositions, liquidity stands at $5.8 billion(3)
1.
2.
See Supplemental Financial Measures at the end of this presentation for reconciliations
As reported by operators as of April 1, 2021; data has not been verified by Welltower
3
3. See slide 22 for details
Welltower at a Glance
World’s Largest Health and Wellness Real Estate Platform
~1,300 ~22M sq. ft.
Senior Living
Communities(1)
ofOutpatient
Facilities(1)
S&P 500
Baa1 BBB+
4
1. As of 12/31/2020Welltower Purpose
Addressing societal challenges through
reimagining and reinventing the built environment
for effective health and wellness care delivery
5Secular Theme | An Aging Population
80+ U.S. Population(1)
20M 8%
25 7%
80+Population
Population80+ (M)80+ Population Growth (%YoY)
19M 7%
23 YoY Growth (%)
6%
18M
6%
21
80+ population is expected to grow by 19.7M 5%
The Aging Population is 17M
nearly 50% over the next decade 5%
19
growing exponentially, 16M
4%
4%
and outspends every other 17
15M
15.6M
age cohort combined on 14M
15 13.2M
3%
3%
health care 13M
2%
2%
13
1%
12M
1%
11
11M 0%
9 0%
10M -1%
1. The Organisation for Economic Cooperation and Development 6Secular Theme | Social Determinants of Health
80% of an individual’s health and wellness is influenced by social determinants(1)
Physical Environment
Safety
Housing Transportation & Accessibility
10%
40%
Socioeconomic factors
Health Care 20%
Drivers of Food Security Financial Community
Health & Nutrition Stability & Socialization
30% Health Behaviors
Exercise & Activity Hygiene Medical Compliance
7
1. Source: Artiga, S., & Hinton, E. (2019, May 29). Beyond Health Care: The Role of Social Determinants in Promoting Health and Health EquitySecular Theme | The Need for Value-Based Care
The US spends the most per capita on health care, yet achieves significantly lower health outcomes
Health Care vs Social Care Spend(1) Health Care Spend vs. Life Expectancy(2)
Social Care Spend Health Care Spend
84
100%
NOR
NLD
FRA
82 AUS
NZL
80%
Life Expectancy at Birth (years)
SWE
CAN
OECD Avg UK
80 GER
60%
USA
40% 78
20% 76
0% 74
UK SWIZ NOR SWE FRA GER NETH AUS NZ CAN US 4% 6% 8% 10% 12% 14% 16% 18%
Health Care Spend (% GDP)
1. OECD (2020), Health spending (indicator). doi: 10.1787/8643de7e-en (Accessed February 2, 2020)
2. Organization for Economic Cooperation and Development. Data as of 2017 8The Health and Wellness Ecosystem
$$$ RELATIVE COST OF CARE $
ACUTE CARE POST-ACUTE CARE SENIORS HOUSING
Hospital Specialty Inpatient Rehab Long-Term Skilled Nursing Memory Assisted Independent Home
Inpatient Care Facility Care Hospital (LTC) Care Living Living
CONSUMER DRIVEN VENUES AND SERVICES
Digital Home Payor Virtual Retail
Innovation Health Programs Health Health
Outpatient Medical Urgent Care
9Portfolio Composition(1)
7% 8%
18%
23% 37%
4Q 2018 46% 4Q 2020
IPNOI IPNOI
10%
10%
19% 22%
Seniors Housing Operating Seniors Housing Triple-Net Long-Term / Post-Acute Care Outpatient Medical Health System
1. Based on In-Place NOI. See Supplemental Financial Measures at the end of this presentation for reconciliations 10Seniors Housing Operating Portfolio Update
11Seniors Housing Operator Platform | Power of Diversification
Diversity Across Acuity, Geography and Operating Model
Operator Diversification | Average Monthly Rent vs Average Portfolio Acuity
$$$
Monthly Rent
$
Low Average Portfolio Acuity High
12Demographic Backdrop | Rapidly Aging Population
80+ Population CAGR | Historical and Projected 10 Year Population CAGR by Age Cohort | 2020 - 2029
5%
US UK Canada
4%
4.0% 4.0% 4.0% 3.8%
3.8% 3.6%
4% 3.6%
3.1%
3.0% 3.0% 3.0%
3% 3.1%
3%
2.0% 2.0% 2.0%
2.3% 1.7%
2%
1.3% 1.4%
2% 1.6% 1.0% 1.0% 1.0%
1.3%
0.3%
1% 0.2% 0.2%
0.0%
0.0% 0.0% 0.0%
1%
-0.3% -0.2%
0%
US UK CAN -1.0% -1.0% -1.0%
2010 - 2019 2020 - 2029
1. Source: The Organisation for Economic Cooperation and Development (OECD) 13Seniors Housing Supply Backdrop
Seniors Housing Historical Supply(1) Rapid Increase in Cost of Key Materials May Curtail Near-Term Starts(2)
NIC Primary and Secondary Markets
2019 – 2020 Price Change YTD 2021 Price Change
14K Construction Starts Rolling 4-Quarter Starts vs. Inventory 5.0%
Lumber +115.4% +16.0%
4.5%
Steel +70.9% +33.8%
12K
71% decline in 4.0% Copper +25.8% +13.9%
10K
starts from peak
3.5% (2)
Historical Lumber Prices
1000
3.0%
8K 900
Lumber prices have more than tripled in last
2.5% 800
five years and risen 280% since April 2020
6K 700
2.0%
600
500
1.5%
4K
400
1.0% 300
2K 200
0.5%
100
0
0K 0.0%
1.
2.
Source: NIC MAP
Bloomberg. Lumber: Random Length Lumber Futures; Steel: U.S. Midwest Domestic Hot-Rolled Coil Steel Index Futures; Copper: Copper Futures. 2019 – 2020 Price Change: 12/312019 – 12/31/2020; YTD 2021 Price Change:
14
12/31/20 – 4/2/2021COVID Recovery | Growth Opportunity
20M US 80+ Population Growth(1) 7.0%
3.6% CAGR 6.0%
Demographic-driven
5.0% Occupancy Recovery
15M
1.3% CAGR 4.0%
3.0%
2.0%
10M
1.0%
80+ Population 0.0%
5M
80+ Population Growth (%YoY)
-1.0%
Supply Deceleration
Seniors Housing Construction vs. Inventory – Rolling Four Quarters(2)
5.0%
Starts as percentage of inventory
4.0% at lowest level since 2Q11
3.0%
2.0% Unique Opportunity for
1.0% Significant NOI Growth
0.0%
1. Source: The Organisation for Economic Cooperation and Development (OECD)
15
2. Source: NIC MAP, Primary and Secondary MarketsSHO Portfolio | Occupancy Trends
Total SHO Month-End Portfolio Occupancy(1)
86% -70 bps
-230 bps Meaningful Improvement in
84% March Occupancy Trends
-170 bps Mar 12 Mar 19 Mar 26 Apr 1
73.7% 73.7% 73.9% 74.0%
82%
-90 bps +4bps +11bps +16bps
-60 bps
80% -60 bps
-30 bps
-40 bps
-70 bps
78%
-100 bps
-140 bps
76%
-90 bps
-10 bps
74%
72%
February March April May June July August September October November December January February March
2020 2021
1. Occupancy represents approximate month end occupancy for all SHO properties in operation as of February 29, 2020, excluding only acquisitions, executed dispositions and development conversions since this date. Approximate month end spot
occupancy is as follows: 2020: February – 85.7%; March – 84.9%; April – 82.7%; May – 80.9%; June – 80.0%; July – 79.4%; August – 78.8%; September – 78.5%; October – 78.1%; November – 77.4%; December – 76.3%; 2021: January – 74.9%;
February – 74.1%; March – 74.0% 16SHO Portfolio | Move Ins & Move Outs(1)
Indexed Move Ins Since February 2020 Indexed Move Outs Since February 2020
120 120
66% Increase 6% decrease
Jan‘21→ Mar‘21 108.8 Jan‘21→ Mar‘21
100 100
100.0 100.0 101.8
93.4
89.8
87.5
80 82.9 82.9 80 84.6 82.6
80.5 79.8 81.7
78.2 78.3 78.5 78.6
74.2
71.6
60 65.2
62.6 63.3 64.5 60
53.8
48.4
40 40
29.6
20 23.7 20
0 0
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2020 2021 2020 2021
1. February 2021 Move Ins & Move Outs have been updated since the March 8, 2021 update to reflect final data received from operators. March 2021 represents preliminary data as reported by operators. Data has not been verified by Welltower 17SHO Portfolio | COVID-19 Impact (1)
Resident COVID-19 Cases – Trailing Two Weeks
COVID-19 Impact
99% decline in TTW cases since peak
• 99% of communities are accepting new residents,
1,400
up from 84% as of mid-January 2021
• Most AL/MC communities have completed
a second or third vaccine clinic • 99% decline in trailing two week (TTW) case count
• Lead generation for many communities
1227 since peak in mid-January 2021
1,200
has returned to pre-COVID levels 1136
• 99% of communities have zero reported resident
COVID-19 cases on a TTW basis versus 64% in
1,000 mid-January 2021
906
874
819
800
780 Operations Update
620 • Visitation restrictions have been eased at many
600 562
578
communities while maintaining strict adherence to
521
485 481 state, local, and/or operator-imposed guidelines
454
427
• Many communities have begun to open dining rooms
400 348
335
304 300
with limited capacity and resumed social programming
291
268
237 246
228
197
• In-person tours are being offered on a more consistent
200
127
165
142147 146
164
125127 117
163
131
basis; virtual tours remain available
119 112
89 92 101 91 100
38
78 69 82
63 71
46 46
81
35
• Previous requirement to self-quarantine post move-in
17 10
0 9
0
has been shortened or removed at some properties if
new resident is fully vaccinated and tested negative for
COVID-19
18
1. All data presented as of April 1, 2021 as reported by operators; has not been verified by WelltowerCOVID-19 | Case Count & Vaccination Update
US COVID New Daily Cases(1) UK COVID New Daily Cases(2) Canada COVID New Daily Cases(3)
7-Day Moving Average 7-Day Moving Average 7-Day Moving Average
300K 70K 9K
60K 8K
250K
7K
50K
200K 6K
40K 5K
150K
30K 4K
100K 3K
20K
2K
50K 10K 1K
K K K
Cumulative US COVID Vaccinations Cumulative US COVID Vaccinations Individuals with One or More Doses in US
Total US Population US Assisted Living and Skilled Nursing Facilities Assisted Living and Skilled Nursing
180M 9M Facilities(1)
160M 8M
140M 7M
120M 6M Residents 2,117K
100M 5M
80M 4M
60M 3M Staff 1,591K
40M 2M
20M 1M
0M 0M
Not Reported 1,129K
1. Centers for Disease Control and Prevention as of April 2, 2021
2. https://coronavirus.data.gov.uk/ 19
3. https://health-infobase.canada.ca/covid-19/covidtrends/Vaccine and Therapeutics Timeline
Vaccine availability for all adult Americans anticipated by May 2021(1)
New Daily Cases 7-Day Moving Avg Cumulative Vaccinations
US daily COVID deaths
EUA granted for Pfizer and Moderna vaccine and peak at 4,396(3)
distribution begins in the UK, US, and Canada; Pfizer/BioNTech COVID-
AstraZeneca granted EUA in the UK in late December (2) 19 shot 91% effective in
250K US Federal Retail Pharmacy Program updated data(6) 140M
for COVID-19 vaccination begins with
21 retail pharmacy partners(4)
120M
200K
EUA granted for J&J
single dose vaccine 100M
for US distribution(5)
150K
80M
~55% of U.S. population
65+ fully vaccinated(2) 60M
100K
40M
50K US Daily New Cases down 80% since January ’21 peak
20M
0K 0M
1. https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/03/02/remarks-by-president-biden-on-the-administrations-covid-19-vaccination-efforts/
2. https://www.astrazeneca.com/media-centre/press-releases/2020/astrazenecas-covid-19-vaccine-authorised-in-uk.html
3. https://covid.cdc.gov/covid-data-tracker/#vaccinations
4. https://www.cdc.gov/vaccines/covid-19/retail-pharmacy-program/index.html 20
5. https://www.jnj.com/johnson-johnson-covid-19-vaccine-authorized-by-u-s-fda-for-emergency-usefirst-single-shot-vaccine-in-fight-against-global-pandemic/
6. https://www.reuters.com/article/health-coronavirus-pfizer/pfizer-biontech-covid-19-shot-91-effective-in-updated-data-protective-against-south-african-variant-idUKKBN2BO68Fhttps://www.cdc.gov/vaccines/covid-19/retail-pharmacy-program/index.htmlBalance Sheet & Investments Update
21Balance Sheet & Investment Highlights
Notable 2021 Year To Date Highlights Liquidity ($M) April 2, 2021
• Near-term liquidity of $4.8 billion as of April 2, 2021 Cash and Cash Equivalents(1) $1,760
• Cash balance pro forma for expected redemption of senior Undrawn Line of Credit Capacity $3,000
(1)
unsecured notes due 2023 totals approximately $1.76 billion ;
revolving credit facility is undrawn with capacity of $3.0 billion Near-Term Liquidity $4,760
• Following the expected redemption of all senior unsecured Expected Proceeds from Assets Held For Sale(2) $37
notes due 2023, WELL will have no material unsecured bond
Expected Proceeds from 2021 Loan Payoffs $265
maturities until 2024
• As of March 31, 2021, completed $209 million of pro rata Expected Proceeds from Recently Announced
$745
acquisitions year-to-date Strategic Transactions(3)
• As of March 31, 2021, completed $216 million in pro rata Near-Term Liquidity + Expected Proceeds $5,807
dispositions year-to-date at a yield of 5.5%, including:
• Completed the third and final tranche of the Wafra Inc. joint
Weighted Average Debt Maturity of 7.8 Years(4)
venture consisting of five OM buildings with $110 million in
pro rata proceeds to WELL
• Near-term capital deployment pipeline remains robust across Baa1 BBB+
a wide range of opportunities
1. Estimated cash balance of $2.5 billon as of April 2, 2021, including cash and cash equivalents and IRC Section 1031 deposits and is shown net of the $740 million paydown of outstanding indebtedness including the redemption of $340 million
in aggregate amount outstanding of 3.750% senior notes due March 2023, all $335 million aggregate amount outstanding of 3.950% senior notes due September 2023 and a portion of the two-year unsecured term loan due 2022
2. Includes 4Q2020 assets held for sale of $255 million as of December 31, 2020 less $218 million related to $200 million in property sales and $18 million in land dispositions closed subsequent to quarter end as of March 31, 2021
3. As indicated in Business Update from March 8,2021, upon successful completion, recently announced strategic transactions are expected to generate proceeds to Welltower of $745 million
4. Represents December 31, 2020 data with pro forma adjustments to reflect the March 25, 2021 issuance of $750 million of 2.800% senior notes due June 2031, the expected April 16, 2021 redemption of $340 million in aggregate amount 22
outstanding of 3.750% senior notes due March 2023 and all $335 million aggregate amount outstanding of 3.950% senior notes due September 2023 and a portion of the two-year unsecured term loan due 2022 as if all transactions had
occurred on December 31, 2020(1,2)
Balanced and Manageable Debt Maturity Profile
Weighted Average Maturity of 7.8 Years
USD Unsecured USD Secured CAD Unsecured CAD Secured GBP Unsecured GBP Secured Term Loan Weighted Average Interest
4.48%
$3,500M 4.15%
3.95%
3.84% 3.84% 3.81%
$3,000M
3.13% 3.07%
$2,500M 2.95%
$2,000M 2.38%
2.07%
$1,500M
$1,000M
$500M
$0M (3) (4)
2021 2022 (3) 2023 (4) 2024 2025 2026 2027 2028 2029 2030 After
After
(in Millions USD)
Unsecured Debt $0 $852 $699 $1,350 $1,250 $700 $739 $1,508 $550 $750 $3,189
Secured Debt $315 $503 $446 $269 $646 $69 $185 $94 $282 $37 $184
Total $315 $1,355 $1,145 $1,619 $1,896 $769 $924 $1,602 $832 $787 $3,373
1. Represents December 31, 2020 data with pro forma adjustments to reflect the March 25, 2021 issuance of $750 million of 2.800% senior notes due June 2031, the expected April 16, 2021 redemption of $340 million in aggregate amount outstanding of 3.750% senior notes due March 2023 and
all $335 million aggregate amount outstanding of 3.950% senior notes due September 2023 and a portion of the two-year unsecured term loan due 2022 as if all transactions had occurred on December 31, 2020. Represents pro rata principal amounts due and excluding unamortized
premiums/discounts or other fair value adjustments as reflected on the balance sheet. Excludes lease liabilities relating to both finance and operating leases
2. Our unsecured commercial paper program and our unsecured revolving credit facility had a zero balance as of December 31, 2020. The unsecured revolving credit facility matures on July 19, 2022 (with an option to extend for two successive terms of
six months each at our discretion). Available borrowing capacity of our unsecured revolving credit facility was $3,000,000,000 as of December 31, 2020 23
3. 2022 includes a $842,000,000 unsecured term loan. The loan matures on April 1, 2022 and bears interest at LIBOR plus 1.20%
4. 2023 includes a $500,000,000 unsecured term loan and a CAD $250,000,000 unsecured term loan (approximately $196,032,000 USD at December 31, 2020). The loans mature on July 19, 2023. The interest rates on the loans are LIBOR + 0.9% for USD and CDOR + 0.9% for CADSupplemental Financial
Measures
24Non-GAAP Financial Measures
We believe that revenues, net income and net income attributable to common stockholders ("NICS"), as defined by U.S. generally accepted accounting
principles ("U.S. GAAP"), are the most appropriate earnings measurements. However, we consider Funds From Operations (FFO), Net Operating Income
("NOI") and In-Place NOI ("IPNOI") to be useful supplemental measures of our operating performance. The supplemental measures are disclosed on our pro
rata ownership basis.
Pro rata amounts are derived by reducing consolidated amounts for minority partners’ noncontrolling ownership interests and adding our minority ownership
share of unconsolidated amounts. We do not control unconsolidated investments. While we consider pro rata disclosures useful, they may not accurately
depict the legal and economic implications of our joint venture arrangements and should be used with caution.
Our supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in
the valuation, comparison, rating and investment recommendations of companies. Our management uses these financial measures to facilitate internal and
external comparisons to historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to
evaluate management.
None of the supplemental reporting measures represent net income or cash flow provided from operating activities as determined in accordance with U.S.
GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by us, may
not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Multi-period amounts may not equal the sum
of the individual quarterly amounts due to rounding.
25FFO and Normalized FFO
Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably
over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many
industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be
insufficient. In response, the National Association of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating
performance for REITs that excludes historical cost depreciation from net income. FFO attributable to common stockholders, as defined by NAREIT, means net
income attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments
of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.
Normalized FFO attributable to common stockholders represents FFO adjusted for certain items detailed in the reconciliations.
Normalizing items include adjustments for certain non-recurring or infrequent revenues/expenses that are described in our earnings press releases for the
relevant periods.
We believe that Normalized FFO attributable to common stockholders is a useful supplemental measure of operating performance because investors and
equity analysts may use this measure to compare our operating performance between periods or to other REITs or other companies on a consistent basis
without having to account for differences caused by unanticipated and/or incalculable items.
26Earnings Outlook Reconciliation
Quarter Ending March 31, 2021
(in millions, except per share data) Current Outlook
Low High
FFO Reconciliation:
Net income attributable to common stockholders $ 102 $ 123
Impairments and losses (gains) on real estate dispositions, net(1,2) (53) (53)
Depreciation and amortization(1) 248 248
NAREIT FFO and Normalized FFO attributable to common stockholders $ 297 $ 318
Per share data attributable to common stockholders:
Net income $ 0.24 $ 0.29
NAREIT FFO and Normalized FFO $ 0.71 $ 0.76
Other items:(1)
Net straight-line rent and above/below market rent amortization $ (18) $ (18)
Non-cash interest expenses 3 3
Recurring cap-ex, tenant improvements, and lease commissions (21) (21)
Stock-based compensation 6 6
(1) Amounts presented net of noncontrolling interests' share and Welltower's share of unconsolidated entities.
(2) Includes estimated gains on projected dispositions.
27NOI and IPNOI
We define NOI as total revenues, including tenant reimbursements, less property operating expenses. Property operating expenses represent costs associated
with managing, maintaining and servicing tenants for our properties. These expenses include, but are not limited to, property-related payroll and benefits,
property management fees paid to operators, marketing, housekeeping, food service, maintenance, utilities, property taxes and insurance. General and
administrative expenses represent costs unrelated to property operations and transaction costs. These expenses include, but are not limited to, payroll and
benefits, professional services, office expenses and depreciation of corporate fixed assets.
IPNOI represents NOI excluding interest income, other income and non-IPNOI and adjusted for timing of current quarter portfolio changes such as
acquisitions, development conversions, segment transitions, dispositions and investments held for sale.
We believe NOI and IPNOI provide investors relevant and useful information because they measure the operating performance of our properties at the
property level on an unleveraged basis. We use these metrics to make decisions about resource allocations and to assess the property level performance of
our properties.
28In-Place NOI Reconciliations
(dollars in thousands)
4Q20 4Q18 In-Place NOI by property type 4Q20 % of Total
Net income (loss) $ 155,278 $ 124,696 Seniors Housing Operating $ 662,852 37 %
Loss (gain) on real estate dispositions, net (185,464) (41,913) Seniors Housing Triple-Net 380,212 22 %
Loss (income) from unconsolidated entities (258) (195) Outpatient Medical 401,996 23 %
Income tax expense (benefit) 290 1,504 Health System 147,136 8%
Other expenses 33,088 10,502 Long-Term/Post-Acute Care 180,140 10 %
Impairment of assets 9,317 76,022 Total In-Place NOI $ 1,772,336 100 %
Provision for loan losses 83,085 —
Loss (gain) on extinguishment of debt, net 13,796 53
Loss (gain) on derivatives and financial instruments, net 569 1,626
General and administrative expenses 27,848 31,101 In-Place NOI by property type 4Q18 % of Total
Depreciation and amortization 242,733 242,834 Seniors Housing Operating $ 965,408 46 %
Interest expense 121,173 144,369 Seniors Housing Triple-Net 411,428 19 %
Consolidated net operating income 501,455 590,599 Outpatient Medical 366,820 18 %
NOI attributable to unconsolidated investments (1) 21,481 21,933 Health System 143,200 7%
NOI attributable to noncontrolling interests (2) (25,950) (40,341) Long-Term/Post-Acute Care 205,324 10 %
Pro rata net operating income (NOI) $ 496,986 $ 572,191 Total In-Place NOI $ 2,092,180 100 %
Adjust:
Interest income $ (21,096) $ (13,082)
Other income (7,215) (7,092)
Sold / held for sale (7,978) (12,724)
Developments / land 1,102 545
Non In-Place NOI(3) (17,413) (21,892)
Timing adjustments(4) (1,302) 5,099
In-Place NOI 443,084 523,045
Annualized In-Place NOI $ 1,772,336 $ 2,092,180
(1) Represents Welltower's interest in joint ventures where Welltower is the minority partner.
(2) Represents minority partner's interest in joint ventures where Welltower is the majority partner.
(3) Primarily represents non-cash NOI.
(4) Represents timing adjustments for current quarter acquisitions, construction conversions and segment or operator transitions.
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